JTK44

A 3 year lease is not 75% of the useful life of the vehicle
The residual, option to buy, is above not below market value (upside down)
A lease end, ownership (title) does not transfer to you - it was and remains with MBFS
The value of the lease payments is not 90% of value of the asset

Which condition(s) above have been met to change an auto lease from an operational lease to a capital lease?

ua549

However a 3 year 9 month year lease and the residual is not always greater than the market value. These 2 conditions can be met under some market conditions at lease end. There are many other leasing companies, not just MBFS. The decision to have an operating lease or a capital lease often depends upon the tax situation since there are pros and cons for both.

An operating lease must be on the balance sheet since 2016.

PatrixUSA

didn't intend to swerve the thread so severely off topic, as this back and forth has now pretty much hijacked op's thread...

as i posted prior, opinions will vary, so if you're okay with leasing, go for it, if you wish to own, go for it, there's no right or wrong approach, each must do what is right for themselves... i would post to start a new thread if you feel there's a need to continue the discussion but there are already many threads out there... (Leasing the right choice? / Leasing and buying) and others...
lenders must love this train of thought... as more and more people in our highly credit-leveraged society seem to think this way... if you don't think a contractual obligation to pay over time should be considered debt your household budget must look amazing... not how i recommend conducting one's finances but again, to each his own...
imo, more and more people lease bc being personally credit-leveraged has been normalized... there once was a time when people waited to buy things until they could afford to pay for them... that financial patience has long since gone by the way side... nowadays, living a highly-leveraged lifestyle is the norm... and again, that's up to each individual's preference... my last comment on this sidebar...
you keep asserting this period of 4 years... you've posted that you've been leasing since 1986, approx 32 years... so you've made monthly lease payments for 32 years, not just 4.

long post short (already too late, i know ;-) there's no right or wrong here, is just comes down to one's preference and approach to cars and finances imo...

rbrylaw

+1 +1 +1

JTK44

I think the plain reading is somewhat different:

1. The useful life of the car is 10 to 12 years. 75% is either 7.5 years of 9 years. A 3 or 4 year lease does not qualify.
2. In 99% of leases the residual is substantially more than the fair market value, the lease is up side down, and as per my prior post this fact is what makes leasing more attractive than owning. So just the opposite of what is required: the buy back is not below market value - it is above market value.
3. At lease end, the title does not change but remains with MBFS
4. The lease payments are not 90% of the value of the Mercedes

Every business wants to expense rather than depreciate. So every business will look to operational rather than capitalize an auto lease.



I am sure you remember many, many years ago in the 1980's lease when leases were structured so that the buyback was $1 while the car could be worth $20,000. The executive of the company, then paid $1, the title was transferred to him and he either sold the car or enjoyed the use of it. This type of lease the IRS shut down. Perhaps this is what you are remembering when you suggest that an auto lease is a capital lease?








99

lipets

Just spoke to the dealer, ending a C300 March 9th, says the residual on the E is now 59%, pushing big time to turn in early skip last 3 payments and buy one in stock.

Love the pressure!!!!

I said I want to order exactly what I want - he said the E is made in Germany not here and end of Dec is likely
I asked about ordering a C he said Feb due to holiday closing here

Said typical E lease is under $700 if deal is done before new year, after that the incentives change (that true?)

I asked him for detailed option list, said the options must be done in the packages as stated online (that true?)

So what are the key questions to ask him about lease numbers to see if he's offering a good deal.
msrp
residual
?

He also said on a purchase about 12% discount


.

rbrylaw

Since I don't lease, I can't offer any good advice on questions to ask there. 12% off MSRP is a very good discount for sure.
The C Class is built in Tuscaloosa, AL. You'd have more luck getting a C here faster than an E from Germany.
The E is built in Bremerhaven, Germany. I honestly think end of December is pushing it for one ordered soon. My car was ordered late July and will hopefully hit the VPC in Brunswick, GA., next week. That's a bit more than 3 full months from order to arrive in the US.
The option's are available online for the 2019 E class right now. You could go out and build exactly what you want in a E300/E300 4Matic/E450 4Matic today to give you a pretty precise price for your build.

CaptainE

rbrylaw

No, sorry. The car was built in Bremen, but shipped from Bremerhaven. I get the two mixed up.

ua549

AFAIK the E Class is built in Sindelfingen a suburb or Stuttgart. That said the plate on my car says Stuttgart. Go figure.

rustybear3

That may be true for the E450 Coupe & Sedans, but they still have the old 2018 E400 Cabriolet models on their website.

rbrylaw

LOL.......Then we can simply say Made in Germany. Somewhere in Germany. But definitely shipped from Bremerhaven. Of that I'm certain!

JTK44

Dear PatrixUSA:

In the north east and especially in the New York metropolitan area 70% of all high-end Audis, BMWs, Lexus’s and Mercedes are leased.

Do you really think that people who lease are:

· Part of a credit leverage society on their way to financial ruin?

· Do not know how to conduct their own finances?

· Have household budgets that look amazing?

Perhaps, just perhaps, these are people who want a new car every 3 years; do not want to bother with the astronomical costs of repair and/or maintenance once the car is out of warranty; do not want the aggravation of selling a car and do not want to be “raped” by the dealer when they go to trade in their car and have taken pen to paper, done the math and have concluded that it is far cheaper to lease a car for 3 years then buy new?



The old adage is still true:



Buy an appreciating asset, rent a depreciating asset

rbrylaw

I used to believe you did well when you bought an appreciating asset. Then 2008 happened and my appreciating assets died. I lost $1,000,000 on appreciating assets.

You're preaching now, my friend. You don't need to justify why you lease. Those who buy, don't need to justify why they buy. I'd hazard a guess that the people who are on this forum, discussing Mercedes automobiles have some means, are better educated than most and are perfectly capable of deciding what works for them and their personal needs.

JTK44

Dear Lipets:


Just spoke to the dealer, ending a C300 March 9th, says the residual on the E is now 59%, pushing big time to turn in early skip last 3 payments and buy one in stock.

I have on order a 2019 E450. For 10,000 miles, 36 months the residual is 59%. The residual on an E300 is 58%. The residuals may change in November and/or December

Love the pressure!!!!

I said I want to order exactly what I want - he said the E is made in Germany not here and end of Dec is likely
I asked about ordering a C he said Feb due to holiday closing here

Said typical E lease is under $700 if deal is done before new year, after that the incentives change (that true?)

That is an excellent price. Check to see if it includes tax and bank fee. As I have posted when you lease you should put nothing down - no cap reduction. When you sign the lease all you want to pay is first months and motor vehicle fees. If the monthly payment is $700 all you want to pay is no more than $950 at lease inception.

I asked him for detailed option list, said the options must be done in the packages as stated online (that true?)

The DOG has been posted in other threads and you can configure your car from the DOG.

So what are the key questions to ask him about lease numbers to see if he's offering a good deal.
msrp
residual
?

He also said on a purchase about 12% discount

The best I could get is just over 10% off of MSRP on my ordered 2019E450. If you can get 12% off of MSRP for a 2019, that imo is excellent and congratulations!

JTK44

Dear RBRYLAW:

Numbers do not lie.

If you do not plan to hold your car for more than 5 years or less than 2 years, it is far cheaper to lease than to buy.

I do not have to explain why I lease: I have the money saved in my pocket!

All this posting about leveraged lifestyle, amazing household budgets, living beyond your means, confusing financing a car with leasing a car all miss the point:

The only purpose of these posts is to determine which is more efficient: Own or lease?

rbrylaw

My Dear JTK44,

Sorry, but screw the numbers. I don't really care about the numbers. The numbers don't drive my purchasing decisions (within reason, of course). I don't buy based on efficiency. I'm not a calculator. I'm a person, who has my own personal interests. And I don't really care if leasing is the smartest thing I could do in this life. You've made it clear you do buy based on efficiency. And that's certainly your choice. I'm sure Mercedes is thrilled to know you'll be back every three years to rent one of their cars. But you've honestly got to stop preaching your efficiency as the ONLY way people should approach driving a Mercedes. It works for you and you're happy with that. Wonderful. But I respectfully suggest you've proselytized this subject to death.

And I remain your friend.

JTK44

Dear RRYRLAW

You have made it patently clear that you do not like to lease.

My posts were not for you - you just posted that you "do not care about the numbers" -

Others I suspect may have a different position and are interested in getting the best deal possible.

Those who are interested in getting the best deal possible need comparative numbers to evaluate the true cost of owning vs. leasing.

My posts, with supporting numbers, are for their benefit.

And I too remain your friend and have appreciated many of your posts and like you, I think the subject is now done.

rbrylaw

I'm glad the subject is now done!

PatrixUSA

i'll bite once more, (but last post on this as it now appears the sidebar is over)

@jtk44 - you posed questions that misstate what i posted in an attempt to bolster your own opinion and undermine mine...
answers (bold in parenthesis) provided below... edits made to correctly reflect what i actually posted...
fair enough...? btw... posting specious questions that misstate what someone else posts is not genuine... and not appreciated (by me at least)
...over and over and over and over and over and over again... for 32 years...? perpetually renting a depreciating asset is not FOR ME... and i cannot emphasis this enough, as i've posted it MANY times, if it works for you, great, but don't attempt to convince everyone else what works for YOU should also work for them. agree. disagree. respect. over & out.

fleuger99

Here in Texas one has to pay their sales tax up front on a lease, it cannot be rolled into the monthly payment. It was the same when I lived in Ohio and leased a BMW X5. Half way through the lease I moved to Boston and was told I had to pay MA sales tax on the balance of my lease payments despite having paid the sales tax in full up front in Ohio. I was told MA had no tax agreement with Ohio so they didn't recognize my tax payment. I got totally hosed but everything I tried didn't work.

JTK44

How much is the tax in Texas? In comparing apples to apples (my lease payment of $899 for a E450 MRSP $71,000 includes taxes and bank fee) how does it stack up i.e., total of lease payment plus taxes? Your MSRP?


Same is true here in New York. Many years ago I took a car from Swap A Lease. The lease payment included sales tax. When I went to register the car, I had to pay sales tax on the remaining balance of lease payments. So in effect I had to pay sales tax on sales tax! Pretty ugly!

I have a cousin in Texas and previously he advised that rather than lease in Texas they have other ways to get you the car without buying it. Works like a lease, but saves a great deal in taxes. It was many years ago and do not know the exact details.

In New York we only pay sales tax on the sum of the lease payments: In my case $28,000 ($800 [lease payment less taxes] times 36 payments) not on either the MSRP or the negotiated price. As the total of the sum of the lease payments is substantial less than either the negotiated price or the MSRP, that is huge tax savings vs. buying.

How are taxes treated in Texas when you lease?

fleuger99

In Texas there is good and bad with regards to leasing and sales tax rates. The sales tax rate for a meal or a pair of shoes in Texas is 8.5%. However, when one buys or leases a vehicle is it 6.5% which gives the buyer a break. The bad side, when one leases a vehicle the sales taxable amount is based on the sale price not the total lease payments amount. So the sales taxes are higher than they would be in your state of NY.

This is a very odd law in Texas. Legally speaking there is no sales tax on a leased vehicle to the party leasing it. However, the county charges sales tax to the dealer who is leasing the vehicle out and they pass that sales tax rate onto the lessee. I thought this was very odd when I first moved to Texas and did lots of research but that is the odd law here in Texas. Additionally, from the counties perspective, who is collecting these taxes, I as a lessee have never paid sales tax on my leased vehicle, its the dealer who has.

One thing I forgot to mention, if a lessee decides to purchase the vehicle they were leasing then they don't need to pay the sales tax on it because the full sales tax for that vehicle had already been paid up front.

superangrypenguin

There doesn't appear to be taxation related discussions in this thread. I finance for 5 years, and drive until 7. I also buy the ELW from MB to get me to the 7th year.

From a taxation perspective, I get to write off depreciation (capital cost allowance), and I get to write off the interest paid in full when financing. With leasing, I'm capped severely and thus with these $80K to $100K cars, the math works out, for me, to finance cars as opposed to lease them.

JTK44

Most companies just deduct the lease payment, which as you know is a combination of depreciation and interest.

Deducting the lease payment is often the the "cleanest" and simplest way to go.

A new car every three years is also a nice "perk" for a company executive.

But I fully understand what you are doing, deducting depreciation and interest, and if that works for you keep doing it.

As you know for personal use, you can neither deduct the interest if you finance; depreciate the car whether you finance or buy outright or the lease payment if you lease.

There are so many variables when you use the car for business that are beyond my level of expertise and that is why, with intent, I did not discuss the tax ramifications of owning vs. financing vs. leasing. Every situation may be different.